Permanent GST reduction on automobiles will be a good step, says SIAM president Wadhera

The PMO, finance ministry, road ministry and NITI Aayog are likely to discuss slowdown in the auto sector and examine ways to arrest the decline and provide support, sources told CNBC-TV18.

Rajan Wadhera, president of Society of Indian Automobile Manufacturers (SIAM), spoke to CNBC-TV18 about what is needed and whether the plans of pushing ahead the scrappage policy and pushing back the EV policy will suffice.

“We have been de-growing and de-growing very fast and there are a lot of concerns around that,” said Wadhera.

“Before the budget, after the budget, we have been requesting the government to look at goods and service tax (GST) reduction from 28 percent to 18 percent and also to look at the scrappage policy which will generate some demand and above all the sentiment which are negative consequent to money not being available, both with the dealers for inventory funding as well as for retail funding money not available with NBFCs and the banks,” he added

“We are hopeful that this initiative is getting addressed. There is some kind of government talk that is going to happen to push the sales for the auto industry. I am hopeful something will emerge,” he said.

According to Wadhera, permanent GST reduction on automobiles will be a good step.

Talking about the industry, Wadhera said, “I am looking at a basket of initiatives that have to be taken to revive the auto industry. GST reduction is one of them. Scrappage policy will lead to a generation of demand and availability and affordability of finance which is not there today and the customer sentiments, which are negative today, probably will get excited because of other economic growth that happens in the country. I think it’s a group of many things that have to be done together to revive the growth.”

“We are asking for a permanent reduction. If that is not feasible with the math that the government will do, we will live with that but we do need a temporary impetus to start the growth of the auto industry,” added Wadhera.

On the growth front, he said we will look at revising full-year guidance post festive season in August and September.